Posted on Monday, Apr 13th 2015
According to Bain & Company research, the personal luxury goods market in the US is estimated to be worth $74 billion. Economic conditions have hurt the segment, but the market has still managed to register a growth of 2% annually. Billion Dollar Unicorn club member RealReal is helping consigners deal with the luxury products.
Belvedere Tiburon, California-based The RealReal was founded in 2011 by Julia Wainwright, ex-CEO of Berkeley Systems, Reel.com, and Pets.com and a brick-and-mortar boutique owner Rati Levesque. The two were introduced to each other through mutual friends at a time when Wainwright had just set up an e-commerce site TheRealReal, and Levesque had just broken even on her store but her store’s expenses were creeping up.
The two hit it off and realized that they could complement each other. Soon Levesque shut down her store and joined Wainwright in her venture. Wainwright’s intuitive sense on shopping habits of consumers for luxury products combined well with Wainwright’s expertise on how to structure an e-commerce company.
Together, they made RealReal a leader in authenticated luxury consignment. They offer the largest selection of pre-owned and authenticated luxury items including luxury fashion, accessories, and art from designers and artists including names like Chanel, Hermès, Cartier, Rolex, Andy Warhol, and Roy Lichtenstein among others.
They have simplified the process of consignment by providing free white glove pick-up in select cities and free shipping as well. Once the products are received, RealReal’s team inspects and authenticates the products before curating them into daily sales. They also allow their consignors to track sales from a personal online dashboard.
RealReal earns revenues like a traditional consignment store. The consignor gets a share of the sale and they keep the rest. RealReal offers their consignors 60% of the sale price and the share increases to 70% once the consignor’s sales reach $7,500 annually.
RealReal has a following of 3.5 million members across 61 countries and claims that products listed on their website usually sell within 3 days. They have sold over a million items since inception.
Their detailed financials are not known, but they are projected to end fiscal 2015 with revenues of $100 million. Despite their high revenue share, RealReal was not profitable as of 2014.
They have been venture funded so far with $83 million in funding raised from investors including Canaan Partners, DBL Investors, Greycroft Partners, Industry Ventures, e.ventures, Expansion Venture Capital, Panarea Capital, Novel TMT Ventures, 14W, Sukhinder Singh Cassidy, and Payam Zamani. Last week, they announced a fresh infusion of $40 million in funding in a round led by Industry Ventures at an undisclosed valuation. RealReal’s valuation may not be known, but it is surely a contender for the Billion Dollar Unicorn space.
More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. Unicorns will also be discussed with some special guests during our 1M/1M Roundtable programs over the next few weeks. To be a part of the conversation, please register here. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.
This segment is a part in the series : Billion Dollar Unicorns
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